Twenty eight per cent of spending within key enterprise IT markets will shift to Cloud by 2022 — up from 19 per cent in 2018, Gartner said on Tuesday.
More than $1.3 trillion in IT spending will be directly or indirectly affected by the shift to Cloud by 2022 and the providers that are able to capture this growth will drive long-term success through the next decade, said the global market research firm.
“The shift of enterprise IT spending to new, cloud-based alternatives is relentless, although it’s occurring over the course of many years due to the nature of traditional enterprise IT,” said Michael Warrilow, Research Vice President at Gartner.
Growth in enterprise IT spending on cloud-based offerings will be faster than growth in traditional, non-Cloud IT offerings.
Despite this growth, traditional offerings will still constitute 72 per cent of the addressable revenue for enterprise IT markets in 2022, according to Gartner.
Technology providers should use the cloud shift as a measure of market opportunity.
“They should assess growth rates and addressable market size opportunities in each of the four Cloud shift categories: system infrastructure, infrastructure software, application software and business process outsourcing,” said Gartner.
The largest cloud shift prior to 2018 occurred in application software, particularly driven by customer relationship management (CRM).
CRM has already reached a tipping point where a higher proportion of spend occurs in Cloud than in traditional software and this trend will continue and expand.
By 2022, almost one-half of the addressable revenue will be in system infrastructure and infrastructure software, according to Gartner.
“The shift to Cloud until the end of 2022 represents a critical period for traditional infrastructure providers, as competitors benefit from increasing cloud-driven disruption and spending triggers based on infrastructure asset expiration,” said Warrilow.